Series I Savings Bonds -- 8.54% guaranteed return for 1 year

I did a quick search and didn’t find anything on the topic but I am sure it’s been discussed here before. But I felt compelled to share this since there are like 7 days left in the month.

I just recently learned about Series I Savings Bonds (or commonly known as I-Bonds) and was amazed at the current guaranteed interest rate of 7.1%. I just learned recently that starting next month, on May 1st, the next composite interest rate for the I-Bond is going to be 9.62%.

So if you invest money into Series I Savings Bonds before the end of the month you get 6 months at 7.1% followed by 6 months at 9.62%. Which comes out to be guaranteed 8.54% return for 12 months.

Series I Savings Bonds are tied to the inflation rate so they are a great vehicle for protecting some cash from short term or longer high inflation. It will protect the money from inflation erosion.

A single person can buy $10k in I-Bonds or if married $20k. There are ways to get even more as well. There are some pros and cons. Some cons: you are locked out of the money for 12 months, and if you draw the money out before 5 years, you lose the last 3 months of interest. Other pros besides protection from inflation: you can never lose the principle, i.e. the interest rate can’t go below zero. The interest gained is exempt from state and local taxes. If the interest is used for higher education, then you don’t have to pay the federal government taxes on the interest. Generally, you don’t pay any taxes on the bond until you redeem it; matures in 30 years – but you can set it up to where you pay the interest each year using accrual method, but it’s a bit more paperwork and your locked into doing it forever.

Check out the following URL to read more about I-Bonds. You can search youtube to watch some videos as well.

I personally plan on using Series I Savings Bond as a vehicle for a $50-$100k emergency fund. Each year I’ll put $10k. After one year I’ll have $10k accessible, after 2 years, $20k. So it’ll be similar to like a CD ladder of sorts, where if I keep putting money in – that money I will be locked out of for year, but if there is enough in the fund, then it won’t matter. Like if I have $60k in the fund, I’ll have $50k accessible for emergencies (plus all the interest).

Again there is like 7 days left to take advantage of this at a guaranteed 8.54% rate for the next 12 months. Otherwise starting next month you’ll get 9.62% the first 6 months, followed by X interest the following 6 months (which will correspond to the inflation rate set on November 1st, 2022).

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I am also keeping like $3k cash in my checking account right now since I am locked out of that first $10k for a year. After a year or two I might drop down the cash I keep in checking account to like $1500 or $2000, since I’ll have a good chunk available in the I-Bonds based emergency fund.

I normally don’t have such a large emergency fund, e.g. $50-100k, but I think it’ll be nice to have at least $50k fund. This way it can cover anything that gets thrown at me. Like say the car breaking down at same time the roof needs replacing etc.

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I bought 10k in the fall and am buying another 10k this week before May 1.

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Yes we’re doing exactly this this weekend! Once I realized the 6 month at the rate at time of purchase thing it mentally really clicked for me lol. We’re still just debating if we do $10 or $20k right now at the current rate.

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How are you buying them? Treasury Direct?

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Yes, that’s the only place to get them. TreasuryDirect.gov

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Bought $9000 last week!

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Pulled the trigger on these today!

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Making a treasury direct account is a pain in the ASS jfc.

Don’t make a secure password y’all, they force you to type it on some horrific little in browser keyboard :weary: I regret my 16 digit randomly generated soup.

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I use a password manager, and my initial password exceeded the 16 characters. I use a bookmark with javascript to disable the virtual keyboard. The first several times I logged in, I’d use the bookmark, and my password manager, and the login would fail, and then I’d copy the bookmark from my password manager into the field, and it would succeed (because the form field limited input to the first 16 characters.) Eventually a post on Hacker News tipped me off, and I realized the characters past those 16 weren’t in use, and I fixed the value in my password manager. :roll_eyes:

So it’s still 16 characters, randomly generated, but it’s not as secure as it could be because it’s not case-sensitive!!!

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javascript:(function(){document.querySelector(".pwordinput").removeAttribute("readonly")})();
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This is technically bad advice :wink:

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Husband and I both couldn’t override being locked out of the field and had to use their stupid keyboard.

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Considering a majority of security vulnerabilities don’t have to do with passwords anyway, right? :woman_shrugging::woman_shrugging::see_no_evil: which is why you get those presentations at defcon about eliminating passwords entirely, etc.

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You probably use Safari or Chrome? Maybe the JavaScript needs tweaked a bit to work in those browsers? (I use Firefox, because I can’t be too much of a party to Google’s domination.)

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Yeah I think we were both on chrome. not on mobile .

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So do y’all think it’s worth it even if I could only put in like $250?

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Probably, if for no other reasons then you have an account, you’ve done it, and it’s a lower barrier to entry to buy more going forward. Obviously with all the caveats around not needing that money for at least a year.

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Fuck it I’m going for it. 8.54% interest is a pretty good deal. That’d be $21 I didn’t have and it sure as hell ain’t earning that in my Betterment account.

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I think it is worth it but only if it doesn’t weaken your target emergency fund. I personally believe it’s the best investment right now since the guaranteed return is so high and it’s virtually risk free. (Not financial advice, just stating my own personal opinion.)

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Thanks for posting this! I just bought some. Now to nudge my partner to do the same…

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